AustLII [Home] [Databases] [WorldLII] [Search] [Feedback]

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

You are here:  AustLII >> Databases >> Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders >> 2005 >> [2005] QBCCMCmr 356

[Database Search] [Name Search] [Recent Decisions] [Noteup] [Download] [Help]

Aarons [2005] QBCCMCmr 356 (29 June 2005)

Last Updated: 2 August 2005

REFERENCE: 0437-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:
11476
Name of Scheme:
Aarons
Address of Scheme:
3355 Gold Coast Highway SURFERS PARADISE QLD 4217

TAKE NOTICE that pursuant to an application made under the abovementioned Act

by Kathryn Margaret James, the co-owner of lot 1

I hereby order that due to the failure of the body corporate committee of Aarons to comply with the requirements of Division 4, sections 22A – D of the Accommodation Module following the AGM held on 28 April 2005, that both the:
• Committee meeting held on 20 May 2005; and
• The extraordinary general meeting held on 24 June 2005
are invalid and of no effect, and all resolutions purportedly carried at the EGM on 24 June 2005 shall not be implemented or otherwise acted upon.

I further order that within six (6) weeks of the date of this order, the body corporate of Aarons shall convene and hold an EGM as required by Division 4, sections 22A – D of the Accommodation Module (the meeting) in order that the body corporate may elect or appoint the "required number" of members to its committee.

I further order that the provisions of sections 23D and 23E of the Accommodation Module shall apply to the meeting and that the secretary and chairperson shall fully comply with the requirements of those sections in relation to the contents of the notice of meeting and the procedures at the meeting for the election of additional committee members, if such election is required in the event of more that 6 eligible persons being nominated for ordinary member positions on the committee.

I further order that if 2 but not more than 6 eligible persons are nominated for the committee, then the meeting shall appoint these persons to be on the committee in accordance with section 22C(1) of the Accommodation Module without the need for there to be an election.

I further order that with the notice of meeting and agenda required to be given in respect of the meeting to be held in accordance with the terms of this order, the secretary shall forward to all owners a full copy of this order (including the accompanying statement of Adjudicator’s reasons for decision which includes as an annexure a copy of my letter to S Shilling of 15 June 2005 explaining my views that owners have a responsibility to participate in the management of their schemes.


STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0437-2005

"Aarons" CTS 11476

The application

The applicant, Kathryn Margaret James, the co-owner of lot 1, has sought the following orders of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) quote –

The commissioner invalidate the committee meeting held on 20 May 2005 and cancel / postpone the proposed EGM called for 24 June 2005 pending the outcome of dispute resolution application ref No: 0076-2005.


The applicant has also sought an interim order, quote:

The commissioner invalidate the committee meeting held on 20 May 2005 and cancel / postpone the proposed EGM called for 24 June 2005 pending the outcome of dispute resolution application 0076-2005.


The scheme

The scheme is a subdivision of 44 lots recorded under a building unit plan (now a building format plan) of subdivision. The regulation module applying to the scheme is the standard module.

Jurisdiction

Section 276(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about-

(a) a claimed or anticipated contravention of the Act or the community management statement; or

(b) the exercise of rights or powers, or the performance of duties, under the Act or the community management statement; or

(c) a claimed or anticipated contractual matter about-

(i) the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or

(ii) the authorisation of a person as a letting agent for a community titles scheme.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)). Section 276(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about-

(a) a claimed or anticipated contravention of the Act or the community management statement; or

(b) the exercise of rights or powers, or the performance of duties, under the Act or the community management statement; or

(c) a claimed or anticipated contractual matter about-

(i) the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or

(ii) the authorisation of a person as a letting agent for a community titles scheme.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

Interim order

Section 279(1) provides that an adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates.

In any consideration of an application which seeks the making of an interim order, it is necessary to determine at the outset whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate. The examples included in the Act under section 279(1) are suggestive of the usual circumstances where an interim order might be made. Both examples are in the nature of injunctive relief. Whilst the range of matters which might be the subject of an interim order is not capable of definition, the applicant does need to establish that the circumstances of the application warrant the making of an interim order.

An interim order will not be made, or will be refused, in circumstances where the only urgency relates to the applicant’s desire to resolve or expedite the matters in dispute, or where the nature of the circumstances are such that the matter is not capable of being dealt with in the context of an interim order. Again, it is not possible to define these circumstances. However, given that an interim order may be made ex parte (ie. without reference to, or submission from the respondent named in the matter), then as a guide, where the circumstances or matters in dispute include matters or allegations not capable of objective consideration, or ready determination, or relate to issues of credibility or character, for example, where an interim order would be inappropriate, then the request for an interim order will be refused. It is a matter for an adjudicator to determine in respect of each application.

The nature of the matters raised are not such that they can be effectively addressed or dealt with by way of an interim order. Rather, they require full investigation, including submission from the other party to the dispute, before any order can be made. As well, the interim order sought is not in the nature of interim relief; rather it seeks a final determination of the issues raised, but by way of an interim order and not a final order. The interim order sought is in exactly the same terms as the final order sought. Accordingly, the application for an interim order is dismissed.

The respondents

The named respondents to this application is the body corporate for Aarons, Mark Howard and Kim Elliott. An owner can be in "dispute" with their body corporate. However, there is no ability for an owner to be in dispute with the body corporate manager for the scheme, in this case Kim Elliott. Consequently there is no jurisdiction for the naming of Elliott as a respondent.

There is jurisdiction for a "dispute" between an owner and an owner. However, the term "owner" is defined to mean a person in the person’s capacity as the owner of the lot. The applicant’s dispute with Mr Howard relates more so to his actions as a committee member, and not as an owner. Consequently, again there is no jurisdiction for the naming of Howard as a respondent.

Given there is no jurisdiction for the applicant being in dispute with either Elliott or Howard, then I am satisfied that the failure to seek submissions from these parties specifically will not constitute a denial of natural justice to these parties. No orders will be made against either Elliott or Howard specifically.

"All owners" are specified as persons who might be affected if an order sought is made. I am satisfied that the failure to specifically seek a submission from all owners, given the time period this would have required, does not constitute a denial of natural justice.

Submissions


The application was received by facsimile after close of business on Thursday 16 June 2005. The applicant sought a determination in respect of the extraordinary general meeting to be held on 24 June 2005 (the meeting). In investigating an application an adjudicator is required to observe natural justice (section 269(2)(a) of the Act). Natural justice requires, amongst other matters, the right of a party (who might be affected if the order sought is made) to be heard.

Given the nature of the orders sought, both interim and final, there could be no avoidance of the requirement to seek a submission, at least from the named respondent, the body corporate. Moreover, reasonableness required that the body corporate be given sufficient time to respond appropriately to the application. The body corporate submission was received Monday 27 June 2005, which is after the meeting in question was held. In terms of my ability to make orders affecting the meeting, this fact is really of no consequence. In my view, it is often preferable to allow a meeting, the validity of which is in issue, to proceed, and to intervene with either an interim order placing the resolutions of the meeting in abeyance, or even, if the circumstances so warrant, a final order invalidating the meeting.

Specifically, a submission from the body corporate has been received. There can be no doubt in my view, given the terms of that submission, that it is a response to all aspects of the application and not simply to the interim order requested. The submission address’s both the interim and final orders sought and concludes, under the latter, that:

The EGM should not be delayed or cancelled and the owners are entitled to vote on how the building should be administered. ...


I am satisfied that the body corporate has had sufficient opportunity to respond to this application.

The dispute

In dispute is the validity of both:

1. A committee meeting held on 20 May 2005 (the committee meeting);
2. An EGM held on 24 June 2005 (the meeting).


The committee meeting proposed the calling of an EGM for the consideration of the motions proposed at the committee meeting for presentation to the body corporate in general meeting. After listing the 8 motions, the committee (being Mark Howard as chairperson, secretary and treasurer) resolved to call an EGM (the meeting) "for the purpose of submitting the proposed motions for owners consideration".

Clearly the meeting was notified to owners and presumably the meeting was duly held on 24 June 2005, though I have not specifically requested a copy of the minutes of the meeting. I would assume however given the make up of ownership that most, if not all, motions proposed for consideration were duly passed at the meeting.

The applicant seek the cancellation (ie. invalidation) of the both meetings or at a minimum a postponement of the meeting "pending the outcome of dispute ... 0076 – 2005".

Application 76 of 2005 is another dispute involving this scheme I am presently investigating and will ultimately adjudicate. The current status of that application is that I am presently awaiting a response by the applicant (in that application) to certain issues which I have raised in written correspondence dated 15 June 2005 (my correspondence). I note that the respondent body corporate, in its submission, has relied on aspects of my correspondence to oppose or rebut the final orders being sought in this application.

The applicant to this application raises technical issues as to validity of the committee meeting (eg. quorum). In the applicant’s opinion, " Mark Howard has called the EGM to hurry through motions fitting the agenda of Mark Howard, prior to a decision being made by the adjudicator relevant to the above dispute resolution". The applicant then states:

The outcome of all motions will be decided by the controlling vote of Mark Howard, as has happened at previous committee meetings (as there has not been a quorum since December 2003) and general meetings.


The applicant then goes on to discuss the merits of each proposed motion. I do not intend to embark on a consideration of the merits of each proposed motion. This is not necessary, certainly, at this time.

If I were determining this application based on the sufficiency of the applicant’s grounds, I would have no hesitation in dismissing this application. The applicant has failed to make any case for the invalidation of the meetings. The applicant is wrong on the question of a quorum. If Mr Howard is at a committee meeting, then given that he is the only member of the committee jointly holding the positions of chairperson, secretary and treasurer, then there is a quorum. Section 30(1) of the accommodation module provides that a quorum is "at least half the number of voting members of the committee". Given that the voting members of the committee is presently one (1), then on Mr Howard’s attendance at a committee meeting there is a quorum.

What the applicant has failed to note is that the committee does not presently "consist of the required number of members" (see section 10(3)). The schedule to the accommodation module provides the definition of "required number" –

"required number", of members for a committee, means at least 3, but not more than the following number of, voting members--
(a) if the scheme includes 7 or more lots--7;
(b) if the scheme includes fewer than 7 lots--the number equalling the number of lots.

The minutes of the AGM held on 28 April 2005 under the heading Election of Committee state:

There being no other nominations received, the following persons were elected to the committee:

Chairman Mark Howard
Secretary / Treasurer Mark Howard


Consequently following the 2005 AGM some two months ago, the committee of this body corporate did not contain the required number of members.

The applicant’s only other ground for invalidation of the two meetings is that "the outcome of all motions will be decided by the controlling vote of Mark Howard, as has happened at previous committee meetings (as there has not been a quorum since December 2003) and general meetings".

I consider that the reason Mr Howard controls the committee is because other owners, by their inaction (in particular, their seeming refusal to nominate for the committee when clearly there are positions available) allow him to. This point was fully explained in my correspondence to the applicant Shilling, a copy of which correspondence was sent to all owners who choose to make a submission in respect of that application and which, for the benefit of all owners, I have annexed as an annexure to this order. The failure of other owners to nominate for the committee is not Mr Howard’s fault or responsibility, and he should not be penalised for his preparedness to be a member of the committee. Moreover, it is not my role to save owners from their own complacency or refusal to become involved. Clearly, there are consequences of such complacency.

As for general meetings, clearly Mr Howard has or controls ownership of a majority of lots in the scheme and is able to out vote minority owners in the determination of most resolutions. However, again, Mr Howard should not be penalised for this. The applicant appears to believe that simply because Mr Howard can control the outcome of most resolutions, then that this is enough to warrant Mr Howard being denied the benefit of his majority ownership or control of lots. It is not, and minority owners should be under no illusion to this effect. In order for any resolution carried on the majority vote of Mr Howard to be invalidated it must be shown to offend against the principles or requirements of the legislation.

The simple fact of majority ownership is not contrary to the principles of the legislation. Rather it is a fact which other owners must accept as part of ownership in this particular scheme. What I am saying is that there is nothing illegal in majority ownership of lots. With majority ownership comes the ability to control the outcome of perhaps most resolutions considered by the body corporate. The invalidation of resolutions carried on the basis of majority ownership is not a matter taken or considered lightly by adjudicators. It is not sufficient to allege the simple fact of majority ownership. Rather, what is required is to show that any resolution carried by the body corporate on the basis of a majority vote is not reasonable and for the benefit of owners of the lots included in the scheme. The onus of establishing this is not an easy one; whilst the interests of the minority owners are a relevant consider, so to are the interests of the majority owner. There have been several pronouncements by adjudicators of what might be required to establish this onus. Suffice to say that it will depend on the circumstances of each individual resolution carried.

I conclude this point by saying to minority owners in this scheme that they will need to make a far more compelling case for invalidation of resolutions carried on the basis of majority ownership (based on considerations of reasonableness and the resolution not being for the benefit of owners generally) than simply alleging the fact of majority ownership.

I conclude this dispute therefore by stating that, based on the grounds advanced by the applicant, I would not grant the relief sought.

The requirements of the legislation

In my view, this body corporate is currently acting outside the specific requirements of the legislation.

I have already referred to the committee (of one, Mark Howard) elected at the last AGM held two months ago, and the fact that other owners failed to nominate for the committee. Further, I have referred to the "required number" of members of the committee. In the case of this body corporate, this means at least 3 members and not more than 7.

Mr Howard is only a single voting member of the committee and has only one vote on the committee, notwithstanding that he holds 3 committee positions (see sections 10(2) and 31(3) of the Accommodation Module). Consequently the committee of this body corporate consists of one voting member. The definition of required number requires a minimum of three and a maximum of seven voting members. Currently, the committee does not consist of the required number. What is the consequence arising from this.

This issue was recognised and addressed in the 2003 amendments to the legislation, specifically the Body Corporate and Community Management Legislation Amendment Regulation (No. 1) 2003 which came into effect on 1 December 2003. In the explanatory notes to that legislation, the following is set out:

Firstly, under the heading Objectives and the sub heading How policy objectives will be achieved and finally the headings Body Corporate Committees – Committee elections:
(bolding is mine for highlighting purposes)

Committee elections
The amendments make additional provisions about the conduct of elections for committees, to address some of the practices that have arisen regarding stacking of committees, to the advantage of a small number of owners or the body corporate manager or resident manager. The amendments include:
• If an owner owes a debt to the body corporate, they cannot be nominated for committee membership, or nominate another person for committee membership. This is to prevent persons
who are not fulfilling their financial obligations to the scheme from becoming committee members.
• An owner can nominate only one person for committee membership. This is to limit stacking of committees.
• However, if there are insufficient nominations to fill all executive or ordinary member positions, the chairperson may call for nominations from the floor of the general meeting. In this case, the restrictions on the number of nominations an owner can make are relaxed.
• If there are insufficient nominations to achieve the minimum number of persons for a committee (three), and one co-owner of a lot has been elected, another co-owner can be nominated. This
does not apply if there are three committee members.
• The minutes must record the number of votes cast for each candidate, and a separate tally sheet must record voting details. This is to ensure that a proper record of the voting is kept, but not
as part of the minutes.
• A process is provided for situations where there are insufficient persons elected to form a committee at an annual general meeting, providing for those persons who have been elected to
call a further general meeting for the purpose of appointing additional members or engaging a body corporate manager to act as the committee.
• A process is provided for the filling of a casual vacancy on the committee. This is to ensure that the committee is not limited in its ability to conduct its business due to the vacancy.

Specifically the Accommodation Module has been amended by the insertion of a new part 3, div 4A. The explanatory note accompanying that new division is as follows:

Insertion of new part 3, div 4A
Clause 20--Although section 23 provides for the filling of casual vacancies, it makes no provision for the situation where an annual general meeting does not appoint sufficient persons to achieve the minimum number required for a committee. If this occurs, or one or more of the executive member positions has not been filled, and the body corporate has not engaged a body corporate manager under division 10, the appointed committee members are required to hold a general meeting for the purpose of appointing additional persons to the committee or, if this fails, engaging a body corporate manager under division 10.

The new provisions are set out in sections 22A-D of the Accommodation Module, quote:

Division 4A--Appointment of committee members at extraordinary general meeting following annual general meeting--Act, s 99
22A Definitions for div 4A [SM, s 24]
In this division--
"elected member", of a committee, means an executive or ordinary member of the committee elected at a relevant annual general meeting of the body corporate.
"relevant annual general meeting" means an annual general meeting of a body corporate, other than an annual general meeting mentioned in section 12(2), at which--
(a) at least 1 person is elected as an executive or ordinary member of the committee; and
(b) either--
(i) at least 1 executive member position on the committee is not filled; or
(ii) the total number of voting members of the committee elected is less than 3; and
(c) the body corporate does not approve the engagement of a body corporate manager under division 10.

22B Requirement to call extraordinary general meeting [SM, s 24A]
(1) Within 1 month after a relevant annual general meeting is held, the elected member of the committee or, if there is more than 1 elected member, the elected members of the committee acting jointly, must call an extraordinary general meeting of the body corporate.
(2) The extraordinary meeting must be held within 2 months after the relevant annual general meeting.
(3) Section 59 does not apply to the calling or holding of the extraordinary general meeting.

22C Appointment of committee member at extraordinary general meeting [SM, s 24B]
(1) At an extraordinary general meeting called under this division, the body corporate may appoint, without conducting an election, a person who is eligible to be a member of the committee to fill a vacancy on the committee.
(2) If 1 co-owner of a lot is an elected member of the committee, not more than 1 other co-owner of the lot may be appointed under this section as an ordinary member if necessary to bring the total number of voting members of the committee to 3.
(3) A person must not be appointed under this section as a member of the committee if, following the appointment, the committee would number more than the required number of members for the committee.

22D Engagement of body corporate manager under div 10 at extraordinary general meeting [SM, s 24C]
(1) The agenda of an extraordinary general meeting of a body corporate held under this division must include a motion approving a person’s engagement as a body corporate manager under division 10.
(2) The motion may be considered at the meeting only if, following any appointment of committee members under section 22C--
(a) at least 1 executive member position on the committee is not filled; or
(b) the total number of voting members of the committee is less than 3.
(3) If the motion is considered at the meeting, it must be considered as the last item of business for the meeting.

I conclude that the provisions of division 4A are directly apposite to the situation applying to this body corporate immediately after the last AGM in relation to the required number of members of the committee. At that AGM:

• 1 person was elected as an executive member of the committee; and
• the total number of voting members of the committee elected was less than 3; and
• the body corporate does not approve the engagement of a body corporate manager under division 10.

The consequence of this outcome is that sections 22B, C and D operate and within one month of the AGM being held, the committee member elected (ie. Mark Howard) was required ("must") call an EGM of the body corporate, which EGM is to be held within two months of the AGM. At that EGM, the body corporate may appoint, without conducting an election, a person who is eligible to be a member of the committee to fill a vacancy on the committee.

The intent of these provisions is as stated in the explanatory note for the sections: where an annual general meeting does not appoint sufficient persons to achieve the minimum number required for a committee and the body corporate has not engaged a body corporate manager under division 10, then appointed committee member(s) are required to hold a general meeting for the purpose of appointing additional persons to the committee or, if this fails, engaging a body corporate manager under division 10.

This is a clear and unambiguous statement to all bodies corporate which do not elect a committee with the required number. In my view, the committee elected (in this case, Mark Howard) is not a true committee but rather is a caretaker committee who’s immediate responsibility is to convene a further EGM in order to attempt to form a legal committee (that is, a committee with the required number of members).

Its seems from the submission of the body corporate, that both Mr Howard, the body corporate manager and the body corporate solicitors who made the submission are unaware of the requirements of these provisions. The submission states at page 3.

The body corporate committee can do nothing if nominations are not received and have not been received for the last number of AGM.


This statement is clearly wrong in light of the requirements of Division 4A. Mr Howard was required to convene a further EGM in accordance with the requirements of that section. He failed to do so, or at least to call a meeting which complied with the requirements of the division. In the circumstances, I conclude that both the committee meeting of 20 May 2005 and the EGM of 24 June 2005 are out of order, and are invalid. This body corporate was under a legislative obligation to first resolve issues regarding its committee before it embarked on any other issue. I consider that any other issue, excepting perhaps an emergency, cannot be considered by the committee unless and until the committee has first complied with the requirements of the division.

For these reasons, I intend to invalidate both the committee meeting and the EGM, and to order that the body corporate must, within six weeks of the date of this order, hold a further EGM in accordance with the legislative requirements set out in Division 4A (sections 22A-D) of the Accommodation Module. I accept that the positions of chairperson, secretary and treasurer are already filled by Mark Howard, and that presumably Mr Howard will wish to continue in these positions. However, this still means that there are a minimum of two (2) and a maximum of six (6) vacant ordinary member positions on the committee capable of being filled. I further intend to order that the provisions of sections 23D and 23E of the Accommodation Module shall apply to the meeting ordered to be convened and that the secretary and chairperson (ie. Mr Howard) shall fully comply with the requirements of those sections in relation to the contents of the notice of meeting and the procedures at the meeting for the election of additional committee members. If 2 and not more than 6 eligible persons are nominated for the committee, than the meeting shall appoint these persons to be on the committee in accordance with section 22C(1) of the Accommodation Module. Only if more that 6 eligible persons are nominated for ordinary member positions on the committee need an election be conducted in the way decided by the body corporate under section 23E(2).

Once the meeting has been conducted, the election held, and the committee is constituted by the required number of members or alternatively, a Division 10 Body Corporate Manager is appointed, the body corporate committee or Division 10 manager can then proceed to consider other issues, including for example, those placed on the agenda of the meeting of 24 June 2005.

I further intend to order that with the notice of meeting required to be given in respect of the meeting to be held in accordance with the terms of this order, the secretary shall forward to all owners a copy of this order which includes as an annexure a copy of my letter to S Shilling of 15 June 2005 explaining my views that owners have a responsibility to participate in the management of their schemes, by for example, being prepared to become members of the committee of such scheme. From the terms of this letter, all owners will have a better understanding of my expectation that they have a responsibility to participate in the management of their scheme. Through the terms of this order, there will be an immediate opportunity to do this, namely by nominating for or being willing to be appointed as a committee member at the forthcoming meeting to be convened.

Annexure A


Your Ref:
Our Ref: RAM:0076-2005


15 June 2005

Mr S Shilling
2/3355 GOLD COAST HIGHWAY
SURFERS PARADISE QLD 4217



Dear Mr Shilling

RE : APPLICATION 0076-2005 "AARONS" BODY CORPORATE

I refer to the grounds of your application. At various times, those grounds canvass alleged failures of the body corporate or committee over a thirteen year period. Many of those alleged failures are directed towards the current committee (Mr Mark Howard) and current body corporate manager. However, Mr Howard has not been a committee member for this entire period (ie. 13 years) and in fact appears to have been an owner and committee member for a much shorter period. Given this general observation, I require a further statement from you more specifically directed and focused towards the following specific matters or issues.

Firstly, the alleged actions of Mr Howard whilst a committee member. If, as you believe, it is the current committee which is ineffective, then please specify specific actions which you consider warrant this conclusion. Whilst this information is probably available in your material, I consider that it is not set out in concise or specific terms. I consider a more concise statement of these aspects to be a reasonable expectation given the nature of the allegations being made against both Mr Howard and the body corporate manager.

Secondly, I note that you (and other owners for that matter) have been in attendance at the last 3 AGM’s of the body corporate. However, at no time have you evidenced an intention to stand for election to the committee. It seems, given the number of nominees, that your (and other owners) election to the committee would have been assured had you (and / or they) simply nominated. Given this, I conclude that your implications that Mr Howard effectively controls the committee and the body corporate lacks conviction. Surely if owners simply nominated for the committee, and were elected, then those owners would similarly have a say in the body corporate via the committee.

Connected with this aspect is the fact that you seek the appointment of a permanent administrator in place of the current committee. Your proposed nominee is a practicing body corporate manager. My preliminary view is that what this body corporate in fact needs, given the alleged issues or problems affecting it, is an effective and involved committee of owners. I do not consider, given the nature of the problems alleged, that a body corporate manager would have either the requisite skills or time to effectively manage this body corporate on the micro level required (given other professional commitments) in place of an effective committee. This is no reflection whatsoever on the skills of the proposed appointee, but rather a reflection on the nature of the problems alleged and my view of what type of structure which would be required to start to address these problems.

Whilst I am prepared to take further submission on this aspect, my preliminary view is as stated: that the proposed appointment of a practising body corporate manager as permanent administrator of the scheme is not the appropriate solution for the issues or problems alleged to be affecting this scheme. Rather, I conclude a more effective solution would be the election or appointment of an effective and involved committee of owners.
This might be achieved if owners were simply prepared to nominate for committee positions. Alternatively, it might be achieved by an order for fresh committee elections, which might be considered, in light of comments made hereafter.

The usual practice of adjudicators is to only appoint an administrator on a permanent basis as you propose (in replacement of a functioning committee) where there is evidence that the body corporate is completely dysfunctional, and that all other avenues of effective management have been exhausted. I consider that whilst there might be some evidence that the body corporate is not functioning effectively, I conclude that all avenues to achieve this have not been exhausted. In particular, it is clear that there are vacant committee positions, and that at successive AGM’s owners are choosing not to nominate for vacant committee positions.

The legislation is such that an owner, notwithstanding that they (or it, in the case of a corporation owner) own more than one lot in a scheme, is only able to nominate "an individual who is a lot owner or who may be nominated by the lot owner in accordance with section 11(1)(b)(ii) or (iii)" (see section 14(2)(b) of the Accommodation Module regulation). This exact equivalent of this provision in the standard module regulation has been interpreted in order 0521 of 2004 as follows:

Membership of committee
As not all owners can be directly involved in the day-to-day management of the body corporate, owners elect committee members to perform this function on their behalf.

To ensure fair representation on the committee, the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module) contains detailed provisions regarding the nomination and election of committee members. The Standard Module was also amended, effective from 1 December 2003, to improve the transparency of committee decision making and address issues including potential stacking of the committee to the advantage of a small number of owners, a body corporate manager, or the resident manager.[1] However, the Commercial Module leaves matters of nomination and election to be determined by the body corporate itself in the form of a special resolution (Commercial Module, 13).


And by the adjudicator in order 0780 of 2004 as follows:

The pre 1 December 2003 position allowed an owner to nominate any number of members to the committee. As well, there was essentially no restriction on who the owner could nominate. That is, the nominee need not have any connection or association with the scheme. The legislation was amended to overcome this, and specifically to prevent the committee being "stacked by owners nominating multiple other persons for election to the committee".

Generally, subject to certain specific rules, the effect of this is that an individual owner may nominate only themselves or one other individual who is a lot owner as a member of the committee.

The explanatory notes for the amendments to the legislation provide as follows, quote:

Replacement of s 13 (Nominations to committee)
Clause 131--This clause provides in section 13(2) that a lot owner may, in response to a notice inviting nominations for election of the committee, nominate only one individual. If the nominating owner is an individual, the individual nominated could be the owner themselves, another lot owner, or a member of the owner’s family or a person acting under a power of attorney given by the owner. If the owner is a corporation, the owner may nominate one individual who is a director, secretary or other nominee of the corporation. If the lot owner is a body corporate for a subsidiary scheme in a layered arrangement of community titles schemes, the owner may nominate a representative of the subsidiary scheme. This amendment, and the amendment in clause 128, limits the possibility of a committee being stacked by owners nominating multiple other people for election to the committee. The amendment does not restrict an owner from nominating the individual for more than one committee position. ...


The above provision as to nominations must be read in conjunction with:

the definition of "required number" of members of the committee" in the Schedule headed "Dictionary" quote:

"required number", of members for a committee, means at least 3, but not more than the following number of, voting members--
(a) if the scheme includes 7 or more lots--7;
(b) if the scheme includes fewer than 7 lots--the number equalling the number of lots.


Section 10 headed Composition of Committee, quote:

10 Composition of committee [SM, s 9]
(1) The committee consists of--
(a) the persons chosen to be the executive members of the committee; and
(b) if ordinary members are chosen for the committee--the ordinary members; and
(c) each person who is a non-voting member of the committee.
(2) The one person may hold the positions of chairperson, secretary and treasurer, or any 2 of the positions, in conjunction.
(3) Subject to subsection (4), the committee must consist of the required number of members for the committee.
(4) Subsection (3) does not apply to a committee mentioned in section 12(3) or (4).
(5) There must be a chairperson, secretary and treasurer, whether or not there is a body corporate manager who has been authorised by the body corporate under section 1194 of the Act to exercise some or all of the powers of an executive member of the committee.


And Section 31 headed Voting at committee meeting, subsection (3)

(3) To avoid doubt, it is declared that a voting member who is an executive member has only 1 vote, even if the person holds more than 1 of the positions of chairperson, secretary and treasurer.


Clearly, the consequence of these provisions is that notwithstanding that an owner might own more than one, or even a majority of lots, in the scheme, such ownership does not allow them to stack or control the committee, unless as appears to be the case here, other owners are simply not willing to nominate and to serve on the committee. I do not consider that it is the role of an adjudicator to save owners from their own failure to take some responsible to become involved in their body corporate.

In my view the solution here is not to remove the committee in favour of a permanently appointed administrator simply to prevent Mr Howard being involved in that committee. Rather it is that other (or minority) owners be prepared to serve on the committee.

In the circumstances, I required your submission on these specific aspects before I will further consider the order I might make in respect of this dispute. However, I suggest your further submissions be guided by the above observations.


Yours faithfully


Richard Meek
Adjudicator
Office of Body Corporate and
Community Management


CC: The Body Corporate for Aarons
CC: All owners who made submissions in respect of application 76-2005

[1] Explanatory Notes - Body Corporate and Community Management
Legislation Amendment Regulation (No. 1) 2003, page 6.


AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback
URL: http://www.austlii.edu.au/au/cases/qld/QBCCMCmr/2005/356.html